Wages etc

shineyt1904

Hi
I have recently set up a business and at the beginning I occasionally got more work than I could handle. Through various contacts and people I've met and worked with over the years, I managed to cover some of the busy times with various staff and paid them cash on the day.
Over the last 6 months this has happened maybe a dozen times and we're talking pretty small amounts of money.
My question is, when I do my self assessment, these payments come I guess under wages. But I'm ashamed to admit some of these people were friends of friends and some I don't even know last names! Will I need to list these people on my tax return? Because they will need to pay tax too...which I obviously explained at the time.
Thanks

Pennywise

Not on the tax return itself, but at a later date, HMRC may ask you for their details.

shineyt1904

I thought so and I will be able to work it out...just need to spend time trawling through stuff. I'm now keeping better records. Its scary how crazy things are at the start!

Asnu

shineyt1904 wrote: »

Hi
I have recently set up a business and at the beginning I occasionally got more work than I could handle. Through various contacts and people I've met and worked with over the years, I managed to cover some of the busy times with various staff and paid them cash on the day.
Over the last 6 months this has happened maybe a dozen times and we're talking pretty small amounts of money.
My question is, when I do my self assessment, these payments come I guess under wages. But I'm ashamed to admit some of these people were friends of friends and some I don't even know last names! Will I need to list these people on my tax return? Because they will need to pay tax too...which I obviously explained at the time.
Thanks

If you are employing people, you should be doing so using PAYE.
You explained they needed to pay tax. Issue is you are required to deduct it and forward it to HMRC.
Also NICS (employers as well as employees) may be due.
Sounds like you are not if you don't even know their names.

Lots of other things you need to ensure too, such as their right to work in the UK. Not sure how you have done that if you don't even know their names.

You can't expect to seek to reduce your own tax liability for your own illegal actions/inactions. If you atte,pt to do so, you will only highlight your own failings to HMRC, as you have done here.

shineyt1904

Thanks for your comments/advice

I haven't paid anyone more than £100 in total which I think is under the PAYE requirement. I do have names, but stupidly not all in one place, so will spend time organising myself better.

Im absolutely not trying to reduce my tax bill because I'm terrified of breaking the rules...

00ec25

shineyt1904 wrote: »

Thanks for your comments/advice

I haven't paid anyone more than £100 in total which I think is under the PAYE requirement. I do have names, but stupidly not all in one place, so will spend time organising myself better.

Im absolutely not trying to reduce my tax bill because I'm terrified of breaking the rules...

you are correct that you do not need to operate PAYE (and therefore proper payroll software) if you pay people less than £113 per week.

however, you are still required to record the payments and (crucially in your case) report the fact you have made the payments to HMRC

self evidently if you show a wages figure in the profit calculation for your business that amount will need to tie up with what you told HMRC were the amounts you paid. As your payments are (you say) below the PAYE threshold you will not have deducted any tax or NI from them so the figures should easily tie up as they will be the pure gross numbers.

shineyt1904

Thanks

I have records of what I've paid.. we're talking maybe £500 in total over 6 months and I even know on what jobs. What I need to do is tally this back to people. My personal earnings are barely hitting £11k.

Suarez

00ec25 wrote: »

you are correct that you do not need to operate PAYE (and therefore proper payroll software) if you pay people less than £113 per week.

however, you are still required to record the payments and (crucially in your case) report the fact you have made the payments to HMRC

self evidently if you show a wages figure in the profit calculation for your business that amount will need to tie up with what you told HMRC were the amounts you paid. As your payments are (you say) below the PAYE threshold you will not have deducted any tax or NI from them so the figures should easily tie up as they will be the pure gross numbers.

This is only the case if every worker you have has signed to say they have not had another job within that financial year.

Suarez

Further to that - if one of the workers does have another job, pension income, other income then ALL workers need to be added to the payroll.

pelirocco

Tbh . If i was you I wouldnt declare it ( and hope it doesnt come back and bite you in the bum ) . Next time you need to employ someone , do it legally and learn how to run a business properly

00ec25

pelirocco wrote: »

Tbh . If i was you I wouldnt declare it ( and hope it doesnt come back and bite you in the bum ) . Next time you need to employ someone , do it legally and learn how to run a business properly

if he does not declare the payments his profits will be overstated and he will be taxed on a profit he did not make in reality

this is a moneysaving website and there are times when that aligns with being legal as well, this is one of them